Battle for Arsenal: Boardroom conflict undermines values

During 20 months of turmoil in Arsenal's boardroom, chairman Peter Hill-Wood, self-proclaimed custodian of the club's values, has repeatedly said he values stability above all else.

Old guard: Peter Hill-Wood has demonstrated that dissent will not be tolerated at the EmiratesPhoto: PA

By Paul Kelso

7:30AM GMT 19 Dec 2008

Events of the last 48 hours have exposed that claim to be as unfounded as the pretence of English ownership. There remain great traditions at Arsenal of course, but the time has come to add 'ruthlessly disposing of directors' to the list of guiding principles chalked up in the marbled halls.

By forcing Lady Bracewell-Smith off the board after an irreparable disagreement about the way forward for the club, principal shareholder Danny Fiszman, his close ally Chips Keswick and Hill-Wood have demonstrated that dissent will not be tolerated at the Emirates.

Bracewell-Smith, who owns 15.9 per cent of the club, is the fourth director to be forced out in controversial circumstances in 20 months. For a club who pride themselves on the oft-invoked principle of 'custodianship' it is a remarkable rate of attrition.

The absence of any plausible explanation for her departure, allied to Hill-Wood's scarcely credible claim not to have discussed her shareholding recently, adds to the impression of a club in denial.

Even those close to the club are uncertain as to the trigger for her departure. One senior figure predicted the club would be in new ownership within a year, while another source felt her departure would consolidate Fiszman's power.

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Whatever the eventual impact, Bracewell-Smith's departure marks the end of a family tie to the club going back to her husband's grandfather Sir Bracewell Smith, who became chairman in 1948.

Add the presence of circling foreign investors in the shape of Uzbek minerals magnate Alisher Usmanov, who owns 24 per cent, and American Stan Kroenke, 12.4 per cent, and Hill-Wood's commitment to "values and tradition" looks as optimistic as Arsene Wenger's aspirations to the Premier League title.

Bracewell-Smith's departure comes 20 months after David Dein was jettisoned for advocating that the club seek outside investment. He subsequently sold his 14 per cent share to Usmanov for £75 million.

Earlier this year Keith Edelman, the managing director who oversaw construction of the Emirates and structured a financing deal that is the envy of every club seeking to build a new stadium, was sacked.

Then on Wednesday this week Bracewell-Smith, the third-largest shareholder, and her brother-in-law Richard Carr, who owns 4.4 per cent, were removed from the Arsenal Holdings board. Carr's exit was officially billed as a resignation and he retains his seat on the football club board, but sources have suggested that he was asked to make way because the board required a unanimous vote to remove Bracewell-Smith.

Forcing out Bracewell-Smith is, on the face of it, a gamble that runs contrary to the guiding principle of the last year, which has been to tie in major shareholders.

After Dein sold his stake to Usmanov and the Uzbek began boosting his holding, purchasing shares at around £8,500 each, the board agreed a lockdown that committed their members to not selling any shares before April 2009. It was updated in October when Hill-Wood announced that the board, with the exception of Kroenke, had agreed a new deal running to 2012 under which they agreed not to sell any shares before April 2009, and thereafter must give first refusal to other board members.

Bracewell-Smith's departure immediately opened the possibility of a hostile purchase from Usmanov or any other buyer with designs on the club, which the board was seeking to avoid.

One explanation is that having brought Kroenke on to the board, Fiszman and Hill-Wood no longer needed her. Fiszman may also have calculated that Usmanov has neither the money nor the inclination to increase his stake. Last night sources at Red and White, Usmanov's investment vehicle, indicated they were not in talks with Bracewell-Smith nor actively increasing their holding.

Her departure with shareholding intact also suggests that existing board members are reluctant or unable to make her an offer.The alternative view is that a bid is what Fiszman wants. By forcing out Bracewell-Smith he may be testing the market.

Bracewell-Smith, for her part, may be wondering about the price of loyalty. By signing up to the lockdown she missed out on the chance to cash in on Usmanov's inflated gathering of shares. She is still sitting on a potential £75 million, but in today's market she may have to bide her time.